While all of the big four banks have no direct exposures to Madoff's alleged fraud - the biggest ponzi scheme in history - the process of identifying counterparties to any indirect exposures began last month as offshore financial institutions scrambled to discover the scope of their losses.

Of the major local banks, only Westpac has confirmed it has no indirect exposures to the scheme run by Bernard L. Madoff Investment Securities, whose assets were frozen on December 12 in a deal with US federal regulators.

"We have no exposure to Madoff,'' Westpac's Jane Counsel said.

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Madoff's Ponzi scheme involved using money from new investors to pay old ones.

The Commonwealth Bank and National Australia Bank are still identifying counterparties and possible indirect exposures.

"At the time our risk management team were asked to identify and assess possible exposures and contact customers accordingly, which is an ongoing process,'' CBA said.

NAB's investigations were also progressing but the bank is "not aware of any material impact on counterparty risk,'' a NAB spokesperson said. No indirect exposures have come to light at ANZ.

"We have been reviewing possible indirect effects, but at this stage we appear to have no indirect exposures to Maddoff,'' ANZ spokeswoman Cherelle Murphy said.

The process of identifying counterparties comes as global banking giants UBS AG and HSBC Holdings face lawsuits from investors angry at their custodian role in funnelling funds to Madoff.

The two banks were the largest European custodians for "feeder" funds which channelled billions of dollars to Madoff, holding assets on behalf of investors.

However, the custodians' legal relationship with investors is at question since Madoff required his clients to open accounts giving custody to Bernard L. Madoff Investment Securities, effectively forcing the fund custodians to outsource custody to him as sub-custodian.

Custodians' duties include overseeing funds and managing cash inflows and payments to investors.

CBA sold its $30 billion custodian business to NAB in June 2003 and has not been active in the space since then, the bank said.

NAB now operates Australia's largest domestic and master custodian business by market share and said the unit had no direct relationship with the Madoff scheme.

"National Custodian Services has never had Madoff as a client or sub-custodian,'' NAB said.

NAB declined to discuss any indirect relationships as a result of clients' instructions to invest in entities associated with Madoff.

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ANZ also offers custodian services with the assets held by ANZ Nominees.